<PAGE> 1
SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the registrant /X/
Filed by a party other than the registrant / /
Check the appropriate box:
/ / Preliminary proxy statement
/ / Definitive proxy statement
/ / Definitive additional materials
/ / Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12
Network Equipment Technologies
- - - - - --------------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
- - - - - --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement)
Payment of filing fee (check the appropriate box):
/ / $125 per Exchange Act Rule 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(j)(2).
/ / $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and
0-11.
(1) Title of each class of securities to which transaction applies:
- - - - - --------------------------------------------------------------------------------
(2) Aggregate number of securities to which transactions applies:
- - - - - --------------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11.
- - - - - --------------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
- - - - - --------------------------------------------------------------------------------
/ / Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the form or schedule and the date of its filing.
(1) Amount previously paid:
- - - - - --------------------------------------------------------------------------------
(2) Form, schedule or registration statement No.:
- - - - - --------------------------------------------------------------------------------
(3) Filing party:
- - - - - --------------------------------------------------------------------------------
(4) Date filed:
- - - - - --------------------------------------------------------------------------------
<PAGE> 2
[LOGO]
800 SAGINAW DRIVE
REDWOOD CITY, CALIFORNIA 94063
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
AUGUST 9, 1994
TO THE STOCKHOLDERS:
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders of
Network Equipment Technologies, Inc., a Delaware corporation (the "Company"),
will be held on Tuesday, August 9, 1994, at 10:00 a.m., local time, at the
principal offices of the Company, 800 Saginaw Drive, Redwood City, California,
for the following purposes:
1. To elect Directors to serve for the terms specified in the
accompanying Proxy Statement and until their successors are elected and
qualified.
2. To approve amendments to the Company's 1993 Stock Option Plan
concerning the Non-Employee Director Automatic Stock Option Grant Program.
3. To ratify the appointment of Deloitte & Touche as independent
accountants of the Company for the fiscal year ending March 31, 1995.
4. To transact such other business as may properly come before
the meeting or any adjournment thereof.
The foregoing items of business are more fully described in the Proxy
Statement accompanying this Notice.
Only stockholders of record at the close of business on June 15, 1994,
are entitled to notice of and to vote at the meeting and at any continuation or
adjournment thereof.
By Order of the Board of Directors
CRAIG M. GENTNER
Secretary
Redwood City, California
June 24, 1994
ALL STOCKHOLDERS ARE CORDIALLY INVITED TO ATTEND THE MEETING IN
PERSON. HOWEVER, TO ENSURE YOUR REPRESENTATION AT THE MEETING, YOU ARE URGED
TO VOTE, SIGN, AND RETURN THE ENCLOSED PROXY AS PROMPTLY AS POSSIBLE IN THE
POSTAGE-PREPAID ENVELOPE ENCLOSED FOR THAT PURPOSE.
<PAGE> 3
[LOGO]
800 SAGINAW DRIVE
REDWOOD CITY, CALIFORNIA 94063
PROXY STATEMENT
FOR THE ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD
AUGUST 9, 1994
The enclosed proxy is solicited on behalf of the Board of Directors of
Network Equipment Technologies, Inc., a Delaware corporation (the "Company"),
for use at the Annual Meeting of Stockholders to be held on August 9, 1994 (the
"Annual Meeting"). The Annual Meeting will be held at 10:00 a.m. at the
principal offices of the Company located at 800 Saginaw Drive, Redwood City,
California 94063. Stockholders of record on June 15, 1994, will be entitled to
notice of and to vote at the Annual Meeting.
The Company intends to mail this Proxy Statement and accompanying
proxy (the "Proxy") to stockholders on approximately June 24, 1994.
VOTING
On June 15, 1994, the record date for determination of stockholders
entitled to vote at the Annual Meeting, there were outstanding and entitled to
vote 17,150,617 shares of Common Stock of the Company ("Common Stock"). Each
stockholder is entitled to one vote for each share of Common Stock held by such
stockholder. All votes will be tabulated by the inspector of election
appointed for the Meeting, who will separately tabulate affirmative and
negative votes, abstentions and broker non-votes. Abstentions and broker
non-votes will be counted in determining whether a quorum is present at the
Annual Meeting. In addition, abstentions will be counted towards the
tabulations of votes cast on proposals presented to the stockholders and will
have the same effect as negative votes, whereas broker non-votes will not be
counted for purposes of determining whether a proposal has been approved or
not.
REVOCABILITY OF PROXIES
Any person giving a proxy has the power to revoke it at any time
before its exercise. It may be revoked by filing with the Secretary of the
Company at the Company's principal executive office, 800 Saginaw Drive, Redwood
City, California 94063, an instrument of revocation or a duly executed proxy
bearing a later date, or by attending the Annual Meeting and voting in person.
SOLICITATION
The Company will bear the entire cost of solicitation, including the
preparation, assembly, printing and mailing of this Proxy Statement, the Proxy,
and any additional soliciting material furnished to stockholders. Copies of
solicitation material will be furnished to brokerage houses, fiduciaries and
custodians holding shares in their names that are beneficially owned by others
so they may forward this solicitation material to such beneficial owners. In
addition, the Company may reimburse such persons for their costs of forwarding
the solicitation material to such beneficial owners. The original solicitation
of proxies by mail may be supplemented by solicitation by telephone, telegram,
or other means by directors, officers, employees or agents of the Company. No
additional compensation
1.
<PAGE> 4
will be paid to these individuals for any such services. Except as described
above, the Company does not presently intend to solicit proxies other than by
mail. The Company reserves the right to have an outside solicitor conduct the
solicitation of proxies and to pay such solicitor for its services.
________________________________________________________________________________
PROPOSAL NO. 1 - ELECTION OF DIRECTORS
________________________________________________________________________________
ELECTION OF DIRECTORS
The Certificate of Incorporation of the Company provides for a
classified Board of Directors. The Bylaws of the Company authorize the Board
to consist of between five and eight directors; the number currently authorized
is eight. The Board is divided into three classes, designated Class I, Class
II and Class III, whose respective current terms expire at the 1994, 1995 and
1996 Annual Meetings of Stockholders. The terms of Messrs. Arnold, Peterson,
and Vigilante as Class III Directors, and Messrs. Baldwin, Doll and Wolf as
Class II Directors, continue beyond the Annual Meeting. The two nominees for
Class I Director are Messrs. Francesconi and Gill. Each person nominated for
election as a Class I Director has agreed to serve if elected, and management
has no reason to believe that any nominee will be unable to serve. Unless
otherwise instructed, the proxy holders will vote the proxies received by them
for such nominees. The two candidates receiving the highest number of the
affirmative votes of the shares entitled to vote at the Annual Meeting will be
elected Class I Directors of the Company. If elected, the members of Class I
will hold office until the 1997 Annual Meeting of Stockholders and until their
successors are elected and qualified or until their death, resignation or
removal.
DIRECTORS
Set forth below is information regarding the nominees for director,
Messrs. Francesconi and Gill, and information regarding other incumbent
directors of the Company, including information regarding their business
experience, certain other directorships held by them, and their ages as of May
30, 1994. In addition, the Class to which the individual is nominated or in
which he is incumbent and expiration of the term of that Class is also set
forth.
<TABLE>
<CAPTION>
CLASS AND
DIRECTOR YEAR TERM
NAME OF NOMINEE AGE SINCE EXPIRES
--------------- --- ----- -------
<S> <C> <C> <C>
Joseph J. Francesconi 51 1994 Class I-1997
Walter J. Gill 59 1991 Class I-1997
</TABLE>
<TABLE>
<CAPTION>
CLASS AND
DIRECTOR YEAR TERM
NAME OF INCUMBENT AGE SINCE EXPIRES
----------------- --- ----- -------
<S> <C> <C> <C>
John B. Arnold 71 1983 Class III-1996
Robert H. B. Baldwin 73 1988 Class II-1995
Dixon R. Doll 51 1984 Class II-1995
DuWayne J. Peterson, Jr. 61 1991 Class III-1996
Frank S. Vigilante 64 1992 Class III-1996
Hans A. Wolf 65 1992 Class II-1995
</TABLE>
2.
<PAGE> 5
John B. Arnold has served as a director of the Company since August
1983. He served as Acting Chief Executive Officer from January 1, 1994, to
March 9, 1994, at which time he was elected Chairman of the Board. He was Vice
President of Harris Corporation from 1981 until his retirement in 1986.
Robert H. B. Baldwin has served as a director of the Company since
November 1988. He is now retired. Mr. Baldwin was Chairman and a Managing
General Partner of the Lodestar Group, an investment banking concern, from
January 1, 1989 to December 31, 1991. Mr. Baldwin served as Chairman of the
Morgan Stanley Advisory Board from January 1984 to December 1988. He served as
Chairman and Managing Director of Morgan Stanley Group, Inc. from January 1983
to December 1983, and as President and Managing Director from 1973 to 1982.
Dixon R. Doll has served as a director of the Company since April
1984. Dr. Doll is Chairman and Chief Executive Officer of the DMW Group, Inc.,
a telecommunications and information systems consulting firm, which he founded
in 1971. Dr. Doll has also been a partner of Accel Partners, a private venture
capital investment partnership, since September 1985. Dr. Doll also serves as
a director of Racotek, Inc. a public company, and a number of private
companies.
Joseph J. Francesconi was appointed President, Chief Executive Officer
and a director of the Company in March 1994. From 1977 until he joined the
Company, Mr. Francesconi served in a number of management capacities at Amdahl
Corporation, a leading mainframe manufacturer, most recently as Executive Vice
President. Prior to joining Amdahl Corporation, Mr. Francesconi spent 12 years
with IBM Corporation.
Walter J. Gill, a founder of the Company, has served as a director of
the Company since January 1991 and from May to August 1983. Since 1988 he has
served as Vice President and Chief Technology Officer. Prior to that time, he
served in several senior management positions, including Vice President and
General Manager, Private Network Division and at the Company as the Chief
Technical Officer from April 1987 to February 1988, and as Vice President,
Engineering from July 1983 until April 1987.
DuWayne J. Peterson, Jr. has served as a director of the Company since
October 1991. Mr. Peterson is President of DuWayne Peterson Associates, an
information technology consulting firm. From 1986 to 1991, Mr. Peterson was
Executive Vice President, Operations/Systems and Telecommunications of Merrill
Lynch & Co., Inc. Mr. Peterson served nine years with Security Pacific
Corporation, where he became Executive Vice President of the Automated Data
Processing Group in 1978 and Chairman of Security Pacific Automation Company in
1984.
Frank S. Vigilante has served as a director of the Company since April
1992. Since his retirement from AT&T in February 1987, Mr. Vigilante has
served as a telecommunications management consultant. Before his retirement,
Mr. Vigilante served in various capacities with AT&T over a period of 29 years,
including service from 1983 as President of Product Management and Development
for AT&T Information Systems and service from 1985 as a Senior Vice President
of AT&T.
Hans A. Wolf has served as a director of the Company since August
1991. Mr. Wolf retired on December 31, 1992, as Vice Chairman of the Board of
Syntex Corporation, a worldwide pharmaceutical company, and he retired from the
Syntex Board in December 1993. He headed several of Syntex's business units
and served as Chief Administrative Officer from 1975 until his retirement.
Previously, Mr. Wolf spent 20 years at Texas Instruments where he held a number
of positions, including Vice President and Treasurer.
STOCK OWNERSHIP
The following table sets forth certain information, as of May 30,
1994, regarding ownership of the Company's Common Stock by (i) each director
and nominee, (ii) each person known by the Company to be the beneficial owner
of 5% or more of the Company's Common Stock, (iii) each executive officer named
in the Summary Compensation Table and (iv) all executive officers and directors
as a group. Unless otherwise indicated, each of the stockholders has sole
voting and investment power with respect to the shares beneficially owned,
subject to community property laws where applicable.
3.
<PAGE> 6
<TABLE>
<CAPTION>
Directors, Five Percent Approximate
Stockholders and all Percentage of
Directors and Officers Number of Outstanding
as a Group Shares Shares
- - - - - ----------------------- -------- ----------
<S> <C> <C>
Kopp Investment Advisors (1) . . . . . . . . . . . . . 2,846,050 17%
6600 France Avenue South, Suite 672
Edina, Minnesota 55435
RCM Capital Management (1) . . . . . . . . . . . . . . 1,586,600 9%
Four Embarcadero Center, Suite 2900
San Francisco, California 94111-4189
State of Wisconsin Investment Board (1) . . . . . . . . 1,515,000 9%
121 East Wilson Street
Madison, Wisconsin 53707
J. P. Morgan & Co., Inc. (1) . . . . . . . . . . . . . 1,441,000 8%
60 Wall Street
New York, New York 10260
John B. Arnold (2) . . . . . . . . . . . . . . . . . . 77,998 *
Robert H. B. Baldwin (3) . . . . . . . . . . . . . . . 59,863 *
John K. Clary (4) . . . . . . . . . . . . . . . . . . . 37,414 *
Dixon R. Doll (5) . . . . . . . . . . . . . . . . . . . 142,653 *
Joseph J. Francesconi (6) . . . . . . . . . . . . . . . 0 *
Craig M. Gentner (7) . . . . . . . . . . . . . . . . . 64,791 *
Walter J. Gill (8) . . . . . . . . . . . . . . . . . . 202,085 *
DuWayne J. Peterson, Jr. (9) . . . . . . . . . . . . . 13,344 *
Raymond E. Peverell (10) . . . . . . . . . . . . . . . 16,666 *
Frank S. Vigilante (11) . . . . . . . . . . . . . . . . 14,626 *
Daniel J. Warmenhoven (12) . . . . . . . . . . . . . . 266,356 *
Hans A. Wolf (13) . . . . . . . . . . . . . . . . . . 9,830 *
All Officers & Directors as a group
(twelve persons) (14) . . . . . . . . . . . . . . . . . 905,626 5%
</TABLE>
See page 10 for a description of the options granted to the Company's CEOs and
four other most highly compensated officers for fiscal 1994 under the 1993
Stock Option Plan. Identified stockholders are "beneficial" owners as defined
in Securities and Exchange Commission regulations.
* Represents less than 2% of the outstanding shares
__________________________________
4.
<PAGE> 7
(1) This information is acquired from publicly available information filed
with the Securities and Exchange Commission as of March 31, 1994,
except for J. P. Morgan & Co., Inc., which is as of May 31, 1994, or
otherwise made available by the above named entities. The Company has
been advised that: Kopp Investment Advisors has no voting and no
investment power with respect to all of the shares, and shared
dispositive power with respect to all of the shares shown opposite its
name; RCM Capital Management has sole voting and investment power with
respect to 1,398,000 of the shares, and sole dispositive power with
respect to 1,586,600 of the shares, shown opposite its name; State of
Wisconsin Investment Board has sole voting and investment power with
respect to the shares shown opposite its name. J. P. Morgan & Co.,
Inc. has sole voting power with respect to 1,098,100 of the shares,
and sole dispositive power with respect to all of the shares shown
opposite its name. The Company has not independently verified the
accuracy of this information.
(2) Includes 76,998 shares issuable within 60 days of May 30, 1994, upon
exercise of outstanding options.
(3) Includes 57,663 shares issuable within 60 days of May 30, 1994, upon
exercise of outstanding options.
(4) Includes 37,414 shares issuable within 60 days of May 30, 1994, upon
exercise of outstanding options.
(5) Includes the following shares as to which Dr. Doll disclaims
beneficial ownership: 393 shares owned by his son, and 4,800 shares
owned by International Synergies Ltd., a corporation in which Dr. Doll
has a beneficial interest. Also includes 45,663 shares issuable
within 60 days of May 30, 1994, upon exercise of outstanding options.
(6) Mr. Francesconi does not own any Company Common Stock shares.
(7) Includes 64,791 shares issuable within 60 days of May 30, 1994, upon
exercise of outstanding options.
(8) Includes 96,250 shares issuable within 60 days of May 30, 1994, upon
exercise of outstanding options.
(9) Includes 12,344 shares issuable within 60 days of May 30, 1994, upon
exercise of outstanding options.
(10) Includes 16,666 shares issuable within 60 days of May 30, 1994, upon
exercise of outstanding options.
(11) Includes 11,626 shares issuable within 60 days of May 30, 1994, upon
exercise of outstanding options.
(12) Includes 5,313 shares purchased by Mr. Warmenhoven under the 1988
Restricted Stock Award Plan which are unvested as of May 30, 1994.
Also includes 182,083 shares issuable within 60 days of May 30, 1994,
upon exercise of outstanding options.
(13) Includes 9,330 shares issuable within 60 days of May 30, 1994, upon
exercise of outstanding options.
(14) See notes (2) through (13) above. Includes 610,828 shares issuable
within 60 days of May 30, 1994, upon exercise of outstanding options,
and 5,313 shares purchased under the 1988 Restricted Stock Award Plan
which are unvested as of May 30, 1994.
BOARD COMMITTEES AND MEETINGS
The Board of Directors has, pursuant to its powers, designated several
committees of the Board. These include the Audit and Compensation Committees,
for which compensation is paid and stock options are granted to members, and
the Finance and Nominating Committees, for which no compensation is paid and no
stock options are granted to members. The Audit Committee consists of Messrs.
Doll, Peterson and Wolf, and the Compensation Committee consists of Messrs.
Baldwin, Doll and Vigilante. The Finance Committee consists of Messrs. Baldwin
and Wolf, and the Nominating Committee consists of Messrs. Doll and Wolf.
The functions of the Audit Committee include review with the
independent accountants of the audit plan and results of each audit and review
with management of the scope and quality of internal accounting and financial
reporting controls in effect. The functions of the Compensation Committee
include determining remuneration for senior officers and directors and the
administration of the Company's stock plans. The functions of the Finance
Committee include review of the Company's cash management and investment
strategies. The functions of the Nominating Committee include establishment of
criteria and procedures for the selection of new directors.
During the fiscal year ended March 31, 1994, the Board of Directors
held six meetings, the Audit Committee held four meetings and the Compensation
Committee held five meetings. Meetings were held by the Nominating Committee
and the Finance Committee in preparation for the Annual Meeting. Each
incumbent director attended 75% or more of the aggregate of the total number of
meetings of the Board of Directors and the total number of meetings of
committees on which he served during the fiscal year. There are no family
relationships among executive officers or directors of the Company.
5.
<PAGE> 8
REMUNERATION
Each non-employee Board member receives $18,000 per year and $1,000
for attendance at each meeting of the Board and of any active standing
committee of the Board for which compensation is paid and on which the director
serves; committee chairmen receive a $2,000 fee for attending a meeting of that
committee. Non-employee directors are eligible for reimbursement of expenses
for attending meetings of the Board of Directors or any committees thereof.
Non-Employee directors are also eligible to participate in the Automatic Grant
Program of the 1993 Stock Option Plan. (See Proposal No. 2 - "Amendment of
Non-Employee Director Automatic Stock Option Grant Program.") The Chairman of
the Board receives $2,000 per Board Meeting and annually is granted an option
for 4,000 shares of Common Stock under the Automatic Grant Program. In
addition, until March 31, 1995, the Chairman of the Board of Directors will
receive $3,000 per month for services rendered.
Non-employee directors first elected to the Board after the 1992
Annual Meeting must retire at age 72. All other non-employee directors must
retire at age 75.
________________________________________________________________________________
PROPOSAL NO. 2 - AMENDMENT OF NON-EMPLOYEE DIRECTOR AUTOMATIC STOCK OPTION
GRANT PROGRAM
________________________________________________________________________________
INTRODUCTION
On June 14, 1994, the Board adopted the recommendation of the
Compensation Committee that the Non-Employee Director Automatic Stock Option
Grant Program portion of the 1993 Stock Option Plan (the "Program") be amended,
subject to shareholder approval, to eliminate accelerated vesting of options at
the time of retirement from the Board, and to allow all outstanding and future
options issued under the Program to Non-Employee Directors to continue to vest
and to be exercisable after retirement until expiration or sooner termination
of the Option Agreement. The term "retirement" applies to Directors who have
served for more than three years and who are at least age 65 at the time they
cease serving on the Board (other than by reason of death).
NON-EMPLOYEE DIRECTOR AUTOMATIC STOCK OPTION GRANT PROGRAM
The automatic option grant program under the 1993 Stock Option Plan
authorizes the grant of options to non-employee members of the Board. At each
Annual Meeting of Stockholders each non-employee Board member who is first
elected or re-elected at that meeting is automatically granted options to
purchase 12,000 shares of Common Stock. A pro-rated number of shares is
awarded to each non-employee Board member who is first elected or appointed
other than on the date of an Annual Meeting. In addition, each non-employee
Director who serves on an active standing committee of the Board is
automatically granted options each year to purchase 4,000 shares of Common
Stock for each committee on which he or she serves plus an additional 4,000
shares for each active standing committee on which he or she serves as
chairman. Current standing committees whose members receive options are the
Compensation and the Audit Committees. A pro-rated number of shares is awarded
to each non-employee Board member who is first appointed to an active standing
committee or to a chairmanship other than on the date of an Annual Meeting.
The option price per share for each automatic grant is the fair market
value per share of Common Stock on the date of grant, and the option price for
purchased shares is payable in cash or shares of Common Stock or through a
cashless exercise procedure. Option agreements have a maximum term of 10 years
from the grant date.
Automatic option grants become exercisable as to one-third of the
shares after one year and as to the remainder of the shares in monthly
installments over the following 24 months, provided the optionee remains a
member of the Board. However, full and immediate vesting will occur upon a
Corporate Transaction or Change in Control (as such terms are defined in the
1993 Stock Option Plan). Also, each automatic option grant will be
automatically canceled upon the occurrence of a Hostile Take-Over (as such term
is defined in the 1993 Stock Option
6.
<PAGE> 9
Plan); in return, if the option has been held at least 6 months, the optionee
will be entitled to a cash distribution from the Company in an amount equal to
the excess of (i) the Take-Over Price (as such term is defined in the 1993
Stock Option Plan) of the shares of Common Stock subject to the surrendered
option over (ii) the aggregate exercise price payable for such shares.
Currently all options granted under the Program and outstanding for at
least one year prior to a member's retirement from the Board or death while
serving on the Board become fully vested at the time of such retirement or
death, provided such Non-employee Board member has served on the Board for at
least three years and, in the case of retirement, is at least age 65 at the
time of retirement. Upon ceasing to be a Board member for any reason (other
than death) an optionee has three months to exercise the options exercisable at
the time of such cessation. Except as provided above, should the optionee die
while serving on the Board or within three months of ceasing to serve on the
Board, then those options vested at the time of death may subsequently be
exercised by the personal representative of the optionee's estate or by the
persons to whom such options are transferred by the optionee's will or by the
laws of inheritance within 12 months of the director's death.
If Proposal No. 2 is approved by the stockholders, the Program and
each option currently outstanding under the Program will be amended to provide
that all stock options granted under this Program to Directors who have served
for at least three years as non-employee Board members and who are at least age
65 at the time of retirement from the Board shall continue to vest and be
exercisable until the expiration or sooner termination of the applicable Stock
Option Agreement. If a retired Non-employee Board member dies, then those
options vested at the time of death may subsequently be exercised by the
personal representative of the optionee's estate or by the persons to whom such
options are transferred by the optionee's will or by the laws of inheritance
within 12 months of the Director's death.
The following table sets forth the options that were received during
fiscal 1994 under the Program. Because Non-employee Directors are the only
recipients of options under this Program, there is no tabular presentation
showing employees, officers or employee directors. The benefits of the
extension upon retirement of the period for option exercise and the benefit
reductions from the elimination of accelerated vesting upon retirement
contained in Proposal No. 2 depend on the nature and timing of retirement from
the Board and, accordingly, are not determinable. There are no federal income
tax consequences to the Company or to the recipients from the amendments to the
1993 Stock Option Plan set forth in Proposal No. 2.
<TABLE>
<CAPTION>
Options Received Under the
Name and Position Automatic Option Grant Program
----------------- -------------------------------
<S> <C>
All current directors who are not executive 88,000
officers as a group (6 persons)
</TABLE>
Approval of Proposal No. 2 requires the affirmative vote of a majority
of the shares of Common Stock represented and voted at the Annual Meeting. A
copy of the 1993 Stock Option Plan, which includes the Non-Employee Director
Automatic Option Grant Program, may be obtained by any stockholder upon written
request to the Secretary of the Corporation at the corporate offices in Redwood
City.
THE BOARD RECOMMENDS A VOTE FOR PROPOSAL NO. 2.
________________________________________________________________________________
PROPOSAL NO. 3 - RATIFICATION OF INDEPENDENT PUBLIC ACCOUNTANTS
________________________________________________________________________________
The Company is asking the stockholders to ratify the selection of
Deloitte & Touche as the Company's independent public accountants for the
fiscal year ending March 31, 1995. The affirmative vote of the holders of a
majority of the shares represented and voting at the Annual Meeting will be
required to ratify the selection of Deloitte & Touche.
7.
<PAGE> 10
In the event the stockholders fail to ratify the appointment, the
Board of Directors will reconsider its selection. Even if the selection is
ratified, the Board in its discretion may direct the appointment of a different
independent accounting firm at any time during the year if the Board determines
that such a change would be in the best interest of the Company and its
stockholders.
Deloitte & Touche has audited the Company's financial statements since
inception. Its representatives are expected to be present at the Annual
Meeting, will have the opportunity to make a statement if they desire to do so
and will be available to respond to appropriate questions.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE STOCKHOLDERS VOTE FOR THE
RATIFICATION OF THE APPOINTMENT OF DELOITTE & TOUCHE TO SERVE AS THE COMPANY'S
INDEPENDENT ACCOUNTING FIRM FOR THE FISCAL YEAR ENDING MARCH 31, 1995.
________________________________________________________________________________
EXECUTIVE COMPENSATION AND RELATED INFORMATION
________________________________________________________________________________
SUMMARY OF CASH AND CERTAIN OTHER COMPENSATION
The following table sets forth the compensation earned by the
Company's Chief Executive Officer (and former Chief Executive Officers) and the
Company's four other most highly compensated executive officers for services
rendered in all capacities to the Company for each of the last three fiscal
years.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
ANNUAL COMPENSATION AWARDS(2)
------------------------------------------------------------
LONG-TERM COMPENSATION
-----------------------
ALL
SECURITIES OTHER
NAME AND UNDERLYING COMPENSA-
PRINCIPAL POSITION YEAR SALARY($)(1) BONUS($) OPTIONS(#) TION($)(3)
------------------ ----- ------------ --------- ---------- --------
<S> <C> <C> <C> <C> <C>
Daniel J. Warmenhoven,............... 1994 $396,725(4) $150,000 40,000 $84,330
Chairman of the Board, 1993 344,199 94,200 0 3,534
President and Chief 1992 312,472 145,099 50,000
Executive Officer
John B. Arnold,...................... 1994 128,500(5) 0 36,000 0
Acting Chief Executive 1993 0 0 24,000 0
Officer 1992 0 0 0
Joseph J. Francesconi,............... 1994 18,846(6) 0 225,000 0
President and Chief Executive 1993 0 0 0 0
Officer 1992 0 0 0
Craig M. Gentner,.................... 1994 180,387 70,200 15,000 1,000
Senior Vice President, 1993 169,386 27,000 0 1,000
Chief Financial Officer 1992 151,192 43,400 40,000
and Corporate Secretary
Raymond E. Peverell,................. 1994 200,769 90,000 25,000 1,000
Senior Vice President, 1993 44,615 0 50,000 0
Sales and Marketing 1992 0 0 0
Walter J. Gill,...................... 1994 164,747 63,400 10,000 1,000
Vice President and Chief 1993 128,153 19,100 0 1,500
Technology Officer 1992 143,800 37,900 0
John K. Clary,....................... 1994 157,853 63,300 35,000 1,000
Senior Vice President, 1993 142,197 22,900 0 0
Product Operations 1992 129,769 33,100 10,000
</TABLE>
__________________________
(Footnotes continued on next page)
8.
<PAGE> 11
1/ Salary and bonus includes amounts deferred pursuant to the Company's
401(k) Plan.
2/ No restricted stock grants were made to any of the above named
officers during the last three (3) fiscal years. As of March 31,
1994, Mr. Warmenhoven held 7,500 unvested shares of restricted stock
with a market price, less consideration paid by him, of $62,737.50.
3/ "All Other Compensation" includes the following: (i) matching
contributions in the amount of $1,000 to the Company's 401(k) Plan on
behalf of Messrs. Gentner, Peverell, Gill and Clary to match 1993
pre-tax salary deferral contributions (which are included under
Salary) made by each to such plan, and, (ii) in the case of Mr.
Warmenhoven, matching contributions in the amount of $1,000 to the
Company's 401(k) Plan, forgiveness of a relocation loan in the amount
of $81,851.33, and a premium payment of $1,478.57 to continue a policy
of life insurance which expired on April 30, 1994. "All Other
Compensation" includes only amounts earned for the two fiscal years
ending March 31, 1994.
4/ Includes $89,850 in severance payments to Mr. Warmenhoven.
5/ Includes all cash compensation (other than Non-employee Director fees)
paid to Mr. Arnold between October 19, 1993 and March 31, 1994.
6/ Per the terms of his employment agreement, receipt by Mr. Francesconi
of cash compensation earned through June 30, 1995, has been deferred
until June 30, 1995.
STOCK OPTIONS
The following table shows all grants of options to the named executive
officers of N.E.T. during the 1994 fiscal year. Pursuant to Securities and
Exchange Commission ("SEC") rules, the table also shows the value of the
options granted at the end of the option terms (ten years) if the stock price
were to appreciate annually at compounded rates of 5% and 10% respectively.
There is no assurance that the stock price will appreciate at the rates shown
in the table. If the stock price does not appreciate, compensation to
executives from options will be zero.
OPTION GRANTS IN LAST FISCAL YEAR(1)
<TABLE>
<CAPTION>
NUMBER OF % OF TOTAL POTENTIAL REALIZABLE VALUE
SECURITIES OPTIONS AT ASSUMED RATES OF
UNDERLYING GRANTED TO STOCK PRICE APPRECIATION
OPTIONS EMPLOYEES IN EXERCISE OR FOR OPTION TERM(6)
GRANTED FISCAL BASE PRICE EXPIRATION ----------------------------
NAME (# SHARES)(2) YEAR(4) ($/SH)(5) DATE 5% 10%
---- ------------- ------------ ----------- --------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C>
Warmenhoven............. 40,000 2.5008% $ 7.000 5/24/03 $ 176,090.50 $ 446,247.89
Francesconi............. 225,000 14.0673 7.750 3/14/04 1,096,635.01 2,779,088.41
Arnold.................. 24,000(3) 1.5002 10.625 8/10/03 160,368.12 406,404.31
Arnold.................. 12,000(3) 0.7502 9.625 1/18/04 72,637.33 184,077.25
Gentner................. 15,000 0.9378 7.000 5/24/03 66,033.94 167,342.96
Peverell................ 25,000 1.5630 9.625 1/18/04 151,327.77 383,494.28
Gill.................... 10,000 0.6252 7.000 5/24/03 44,022.62 111,561.97
Clary................... 10,000 0.6252 7.000 5/24/03 44,022.62 111,561.97
Clary................... 25,000 1.5630 9.625 1/18/04 151,327.77 383,494.28
</TABLE>
9.
<PAGE> 12
1/ The Company did not grant any Stock Appreciation Rights during the
last, or in any prior fiscal year.
2/ Includes options granted under the 1983 and 1993 Stock Option Plans
during fiscal 1994. Options are granted at fair market value at date
of grant, and become exercisable for 25% upon the expiration of twelve
(12) months from Grant Date; the balance becoming exercisable in a
series of thirty-six (36) successive equal monthly installments
beginning thirteen (13) months after the Grant Date until the
forty-eighth (48th) month following the Grant Date. Each option has a
maximum term of ten years subject to earlier termination in the event
of the optionee's termination of employment with the Company. Does
not include stock issued under the Company's 1990 Employee Stock
Purchase Plan.
3/ Shows option granted to Mr. Arnold under the 1993 Stock Option Plan
for 12,000 shares and options for 24,000 shares under the Non-
Employee Director Automatic Grant Program during fiscal 1994. These
options were granted at fair market value at date of grant, and become
exercisable for 33 1/3% of the shares upon the expiration of twelve
(12) months from Grant Date; the balance becoming exercisable in a
series of twenty-four (24) successive equal monthly installments
beginning thirteen (13) months after the Grant Date until the
thirty-sixth (36th) month following the Grant Date.
4/ A total of 1,599,450 options were granted to employees, including
executive officers and directors, during fiscal 1994.
5/ The exercise price may be paid in cash, in shares of Common Stock
valued at fair market value on the exercise date or in a combination
of cash and stock.
6/ The Potential Realizable Value uses the hypothetical rates imposed by
the Securities and Exchange Commission and is not intended to forecast
future appreciation, if any, of the Company's stock price. There can
be no assurance that the value reflected in this table will be
achieved. Unless the stock price increases, which will benefit all
stockholders commensurately, an optionee will realize no gain.
The following table sets forth information concerning the grant and
the exercise of options during the 1994 fiscal year and unexercised options
held as of the end of such year by persons who served as the Chief Executive
Officer of the Company, as well as the Company's four (4) other most
highly-paid executive officers for such fiscal year.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
AGGREGATE
VALUE REALIZED NUMBER OF SECURITIES VALUE OF UNEXERCISED
SHARES (MARKET PRICE AT UNDERLYING UNEXERCISED IN-THE-MONEY
ACQUIRED EXERCISE LESS OPTIONS AT FY-END(#) OPTIONS AT FY-END($)
ON EXERCISE EXERCISE PRICE) --------------------------- ---------------------------
NAME (#) ($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- ------------ ---------------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Warmenhoven.................. 0 $ 0.00 163,750 71,250 $226,404.50 $82,343.75
Francesconi.................. 0 0.00 0 225,000 0.00 0.00
Arnold(1).................... 1,000 1,500.00 75,665 47,334 24,250.00 0.00
Gentner...................... 0 0.00 57,292 32,708 52,135.42 29,737.25
Peverell..................... 0 0.00 14,583 60,416 0.00 0.00
Gill......................... 0 0.00 89,583 20,416 156,766.75 31,979.17
Clary........................ 0 0.00 32,525 44,307 51,996.44 27,027.25
</TABLE>
1/ The 1,000 Shares acquired by Mr. Arnold are currently owned by Mr.
Arnold and are included in the Stock Ownership table on page 5. Of the
unexercised options held by Mr. Arnold, all but 12,000 were granted under the
Non-Employee Director Automatic Stock Option Grant Program.
10.
<PAGE> 13
COMPENSATION COMMITTEE REPORT
As members of the Compensation Committee (the "Committee") of the
Network Equipment Technologies, Inc. Board of Directors, it is our duty to
exercise the power and authority of the Board of Directors with respect to the
compensation of executive officers. As such, it is our responsibility to set
the base salaries and to approve the individual incentive awards to such
executive officers during the year. In addition, the Committee administers the
Company's 1993 Stock Option Plan, 1988 Restricted Stock Award Plan and 1990
Employee Stock Purchase Plan.
For the 1994 fiscal year, the Committee approved the compensation
payable to Mr. Warmenhoven (Chief Executive Officer until his resignation
effective December 31, 1993); Mr. Arnold (who served as Acting Chief Executive
Officer until the appointment on March 9, 1994, of Mr. Francesconi as President
and Chief Executive Officer); and of Mr. Francesconi. The base salary and
incentive compensation of the Company's executives, other than CEO
compensation, are established by the CEO with assistance of the Company's human
resources staff and are reviewed and approved by the Compensation Committee.
COMPENSATION PHILOSOPHY
Under the supervision of the Committee, the Company has developed a
compensation philosophy which is designed to attract and retain qualified key
executive officers critical to the Company's success and to provide such
executives with performance-based incentives tied to the profitability of the
Company and stockholder value. As an officer's level of responsibility and
accountability within the Company increases over time, a greater portion of
each executive officer's compensation is intended to be dependent upon the
Company's performance, the individual's contribution to the success of the
Company as measured by individual performance, and stock price appreciation
rather than upon base salary. Accordingly, each executive officer's
compensation package is fundamentally comprised of three elements: (i) base
salary which reflects individual responsibilities, performance and expertise;
(ii) annual variable performance awards payable in cash and tied to the
individual's and the Company's achievement of certain goals; and (iii)
long-term stock-based incentive awards which strengthen the mutuality of
interests between the executive officer and the Company's stockholders.
COMPENSATION FACTORS
Several important factors which were considered in establishing the
components of each executive officer's compensation package for the 1994 fiscal
year are summarized below. In setting executive compensation for future fiscal
years, additional factors may also be taken into account and the Committee may
in its discretion apply entirely different factors, particularly different
measures of performance. All compensation decisions are designed to further
the Company's compensation philosophy described above.
Base Salary. Base compensation is established based on competitive
market rates, through comparisons with companies of similar size and
complexity, at the time the executive is first hired. Base compensation
thereafter is reviewed annually using an analysis of competitive salary ranges
provided by independent compensation surveys which focuses on Silicon Valley
companies, with particular emphasis on the reported compensation paid by
companies similar in size and business who compete with the Company in the
recruitment and retention of senior personnel. The base salary level for
executive officers is generally at the sixtieth percentile level determined for
such individuals on the basis of the external salary data provided the
Committee by the independent compensation surveys. The Committee believes that
the Company's most direct competitors for executive talent are not necessarily
all of the companies that the Company would use in a comparison for shareholder
returns. Therefore, the compensation comparison group is not the same as the
industry group index in the Performance Graph, below.
Incentive Compensation. The Company's officers are eligible to
participate in an annual incentive compensation plan with awards based
primarily on financial and individual performance targets. Targeted awards for
executive officers of the Company under this plan are consistent with targeted
awards of companies of similar size and complexity to the Company, based on a
review of independent compensation surveys covering companies in the Silicon
Valley. Actual awards were subject to decrease or increase on the basis of the
Company's core business performance (which did not include the Company's
Adaptive Division) and the individual's performance and at the discretion of
the Committee. In the 1994 fiscal year, executive officers were eligible for
target incentives set
11.
<PAGE> 14
between 40% and 50% of salary. Payouts with respect to 1994 were based on
Company performance as well as individual performance against objectives which
directly supported the achievement of the Company's goals. The Company's core
business performance for 1994 was measured on the basis of operating profit and
the 1994 goals were substantially met and payouts were based on Company
performance.
Long-Term Incentive Compensation. The Company has adopted the 1993
Stock Option Plan and 1988 Restricted Stock Award Plan to provide executive
officers and other key employees with incentives to maximize long-term
stockholder values. Awards under the 1993 Stock Option Plan can take the form
of stock options and stock appreciation rights, and awards under the 1988
Restricted Stock Award Plan take the form of restricted stock, all of which are
designed to give the recipient a significant equity stake in the Company and
thereby closely align their interest with those of the Company's stockholders.
In addition to linking executive compensation directly to stockholder value,
the Committee believes that stock options and restricted stock awards, through
staged vested provisions, perform an important role in motivating and retaining
key executives. The Committee has established certain general guidelines in
making option grants to corporate officers in an attempt to target a fixed
number of unvested option shares based upon the individual's position with the
Company and his or her existing holdings of vested and unvested options.
However, the Committee does not adhere strictly to these guidelines and will
occasionally vary the size of the option grant made to each executive officer
as circumstances warrant.
CEO Compensation. Mr. Warmenhoven served as Chief Executive Officer
from the beginning of the fiscal year until December 31, 1993. Mr. Arnold, a
member of the Board of Directors and, until December 31, 1993, a member of the
Audit and Compensation Committees, served as acting Chief Executive Officer
following Mr. Warmenhoven's departure until his successor was appointed. Mr.
Joseph Francesconi was appointed President, Chief Executive Officer and a
director of the Company as of March 9, 1994.
The annual base salary paid to Mr. Warmenhoven for the 1994 fiscal
year was set in 1993 based on competitive market rates and the Committee's
review of his performance, consistent with the aforementioned philosophy.
Stock options to purchase 40,000 shares, but no restricted stock grants, were
made to Mr. Warmenhoven during the last fiscal year. On November 19, 1993, in
connection with Mr. Warmenhoven's announced intention to resign, the Company
entered into an Employment, Consulting and Severance Agreement with him
("Agreement"). The Agreement provided, among other provisions regarding the
terms of his employment while the Company searched for a new Chief Executive
Officer, for the continuation of his base salary through March 31, 1995, the
payment of a guaranteed bonus notwithstanding the Company's success or failure
to achieve performance targets, and the forgiving of a housing loan previously
extended to him and, consistent with an earlier agreement, payment of the taxes
due as a result of such forgiveness. Such payments were made in partial
consideration for Mr. Warmenhoven's agreement to provide services as a
consultant through March 31, 1995 and his agreement not to seek employment from
certain of the Company's direct competitors. The primary purpose of this
Agreement was to provide Mr. Warmenhoven with an incentive to remain with the
Company for a period during the search for a successor CEO, to limit his
ability to assist competitors, and to secure his assistance and expertise in
the new Chief Executive Officer's transition. The Committee consulted an
independent compensation expert prior to executing the Agreement and believes
that the payments called for under the Agreement were warranted in light of the
significant contributions made by Mr. Warmenhoven to the Company's performance
during his tenure and that the terms of the Agreement are appropriate under the
circumstances.
During Mr. Arnold's tenure as Chief Executive Officer, he was paid
compensation based on a negotiated rate. No bonuses were paid or restricted
stock grants were made to Mr. Arnold. A stock option to purchase 12,000 shares
was granted to Mr. Arnold in consideration of his serving as Acting CEO.
In March 1994, the Company entered into an employment agreement with
Mr. Francesconi which provides for the deferral until June of 1995 of payment
of a base salary of $350,000, and a target bonus for fiscal 1995 equal to 50%
of his base salary, of which half will be paid regardless of Company or
individual performance. A stock option to purchase 225,000 shares was also
granted to Mr. Francesconi. In addition, the agreement provides that in the
event of his termination other than for cause prior to completing two (2) years
of service, Mr. Francesconi shall, for a period of one year, receive his base
salary (subject to certain offsets), standard employee benefits and continued
stock options vesting. The agreement also provides that he would not perform
services for any competitor during that one-year period and he would provide
services to the Company for up to three (3) days per month. The Committee
believes that the terms of his employment agreement were necessary to attract a
chief executive officer of Mr. Francesconi's caliber to the Company. In
structuring the compensation, independent compensation advice was obtained.
12.
<PAGE> 15
Tax Limit. The cash compensation to be paid to each of the Company's
executive officers for the 1994 fiscal year is not expected to exceed the $1
million limit on the tax deductibility of such compensation imposed under
federal tax legislation enacted in 1993. In addition, the Board intends to
amend the Company's 1993 Stock Option Plan to impose a limit on the maximum
number of shares of Common Stock for which any one participant may be granted
stock options over the remaining term of the Plan in order to ensure that any
compensation deemed paid to an executive officer upon the exercise of an
outstanding option under the 1993 Stock Option Plan will qualify as
performance-based compensation and not be subject to the $1 million limitation
on tax deductibility. No other changes to the Company's executive compensation
programs are planned as a result of the new limitation until final Treasury
Regulations are issued with respect to such limitation.
We conclude our report with the acknowledgment that no member of the
Compensation Committee is a former or current officer or employee of the
Company or any of its subsidiaries.
Compensation Committee
Robert H. B. Baldwin
Dixon R. Doll
Frank S. Vigilante
13.
<PAGE> 16
STOCK PERFORMANCE GRAPH
The graph depicted below shows the Company's stock price as an index
assuming $100 invested over the five fiscal year period beginning on March 31,
1989, along with the composite prices of companies listed in the S&P 500 Index
and H&Q Technology Index.
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN AMONG
NETWORK EQUIPMENT TECHNOLOGIES, INC., S&P 500 INDEX &
H&Q TECHNOLOGY INDEX
<TABLE>
<CAPTION> NETWORK
MEASUREMENT PERIOD EQUIPMENT H&Q TECHNOLOGY
(FISCAL YEAR COVERED) TECH INC. S&P 500 INDEX
--------------------- ---------- ------- --------------
<S> <C> <C> <C>
MAR 89 $100 $100 $100
MAR 90 139 115 111
MAR 91 37 127 128
MAR 92 64 137 150
MAR 93 28 153 165
MAR 94 39 151 184
</TABLE>
Assumes $100 invested on 3/30/89 in Network Equipment Technologies stock, the
S&P 500 Index, and the H&Q Technology Industry Index. Assumes reinvestment of
all dividends. Stockholder returns over the indicated period should not be
considered indicative of future stockholder returns.
14.
<PAGE> 17
EMPLOYMENT CONTRACTS AND TERMINATION OF EMPLOYMENT ARRANGEMENTS
On January 8, 1993, the Company entered into an employment agreement
with Raymond E. Peverell in connection with his initial employment. This
agreement provides, among other things, that if he is terminated (other than
for cause) prior to completing two (2) years of service then Mr. Peverell for
one year would receive his base salary and standard employee benefits and his
stock options would continue to vest. The Agreement also provides that he
would not perform services for any competitor during that one-year period and
that he would provide consulting services to the Company for up to three (3)
days per month. The agreement provides for an annual base salary of $200,000
and an incentive payment of at least $90,000 for fiscal 1994.
On February 23, 1994, the Company entered into an Employment Agreement
with Craig M. Gentner providing for an annual base salary of $180,000. Under
this Agreement, if Mr. Gentner's employment is terminated involuntarily other
than for cause prior to February 23, 1996 (e.g. a change in control, a
substantial reduction in responsibility or a relocation), then for one year Mr.
Gentner would continue to receive his base salary (subject to certain offsets)
standard employee benefits, and his targeted incentive bonus and his stock
options would vest. During such one-year period, he would be obligated to
provide services to the Company for up to an average of eight (8) hours per
month.
The Company's employment and consulting and severance contracts with
Messrs. Francesconi and Warmenhoven are described above in the Compensation
Committee Report. Each of the four agreements provides for a release of all
claims by the employee as a condition to receiving the post-employment
benefits.
COMPLIANCE WITH SECTION 16(A) OF THE SECURITIES EXCHANGE ACT OF 1934
Under the securities laws of the United States, the Company's
directors, executive officers and any persons holding more than ten percent of
the Common Stock are required to report initial ownership of the Common Stock
and any subsequent changes in ownership to the Securities and Exchange
Commission ("SEC"). Specific due dates have been established by the SEC and
the Company is required to disclose in this Proxy Statement any failure to file
by these dates. Based upon (i) the copies of Section 16(a) reports which the
Company received from such persons for their 1994 fiscal year transactions and
(ii) the written representations received from one or more of such persons the
Company has concluded that the following persons failed to file timely Forms 4,
or Forms 5 regarding changes in Ownership: Mr. John B. Arnold, Chairman of the
Board, one report with respect to transfer of $100,000 7 1/4% Convertible
Subordinated Debentures due in 2014 from a trust to an IRA on 10/1/93; Mr.
John K. Clary, Senior Vice President, one report with respect to the sale of
237 shares of Common Stock on 11/10/93; Dr. Dixon R. Doll, Director, one
report with respect to the transfer on 3/28/94, of 393 shares of Common Stock
from his wife as trustee For Benefit Of minor child to an adult child.
________________________________________________________________________________
OTHER BUSINESS
________________________________________________________________________________
The Board of Directors knows of no other business that will be
presented for consideration at the Annual Meeting. If other matters are
properly brought before the Annual Meeting, however, it is the intention of the
persons named in the accompanying Proxy to vote the shares represented thereby
on such matters in accordance with their best judgment.
15.
<PAGE> 18
________________________________________________________________________________
STOCKHOLDER PROPOSALS
________________________________________________________________________________
Proposals of stockholders that are intended to be presented at the
Company's Annual Meeting of Stockholders to be held in 1995 must be received by
the Company no later than February 23, 1995 in order to be included, if
appropriate, in the Proxy Statement and Proxy relating to that meeting.
In addition, pursuant to the Company's bylaws, in order for any
stockholder to propose any business (including nominations for director) at an
annual meeting, such stockholder is required to provide the Company with
advance written notice at least 30 days prior to such meeting (no later than
July 10, 1994, with respect to the Annual Meeting to be held August 9, 1994).
The notice must contain certain information regarding such stockholder (and any
nominee for director), any arrangements between the stockholder and the
nominee, and any other information regarding such nominee or each matter of
business proposed by the stockholder that would be required to be disclosed in
a proxy statement filed with the Securities and Exchange Commission for
solicitations of proxies to approve such proposed business.
Any such proposals or notices should be directed to the attention of
the Secretary, Network Equipment Technologies, Inc., 800 Saginaw Drive, Redwood
City, California 94063.
By order of the Board of Directors
CRAIG M. GENTNER
Secretary
June 24, 1994
16.
